International Trade Discussion on Environmental Goods Picks Up With Great Potential for SEMI Members

International Trade Discussion
on Environmental Goods Picks Up With Great Potential for SEMI Members

On
September 9th, 2012, officials from 21 pacific-rim nations reached an agreement
to reduce tariffs on a list of 54 environmental goods. Nearly two years later, that list has become
the impetus to a green growth strategy that seeks to revolutionize the international
trading regime. Last month many of the
same economies met in Geneva, Switzerland for the formal launch of negotiations
on the Environmental Goods Agreement (EGA), a trade agreement which hopes to
achieve global free trade in environmental goods. The EGA will be negotiated under the
framework of the World Trade Organization (WTO) and seeks to strengthen the
rules-based multilateral trading system while supporting the WTO’s overall
mission to liberalize trade.

The
EGA offers a unique opportunity for U.S. companies producing environmental
items and technologies to penetrate foreign markets. Global trade in environmental goods is
estimated at nearly one trillion dollars annually, and some WTO Members impose
duties as high as 35 percent on certain products. In 2013, the U.S. exported $106 billion in
environmental goods, including items such as PV cells and modules. The U.S. and thirteen other nations at the
table for the launch of EGA negotiations account for 86% of the global trade in
the sector. These economies include
Australia, Canada, China, Costa Rica, the EU, Hong Kong, Japan, Korea, New
Zealand, Norway, Singapore, Switzerland and Chinese Taipei.

Chinese
participation in the talks is significant from both an economic and political perspective.
The tariffs that have systematically impeded U.S. renewable energy equipment
installation in the Chinese market would be significantly reformed with a
high-standard EGA. These negotiations could also help facilitate a removal of non-tariff
barriers such as the local joint venture policy, which requires foreign
companies to set up a business on the ground and cede 51% ownership to Chinese
partners in order to sell equipment in the country.

Having
committed to begin negotiations to liberalize trade in environmental goods,
negotiators now have the much harder task of defining the term “environmental
good.” The list of 54 items from the
2012 APEC meeting will serve as the foundation for discussions but trade
officials from each country will now seek to include a multitude of domestic
products that can be loosely defined as serving an environmental purpose.

As
part of SEMI’s trade activities, we are working to identify those equipment and
materials items which meet this very broad classification. For more information
on identifying such products, please contact Taylor Sholler, Manager of Public
Policy at Tsholler@semi.org.